MedCAP’s Recommendations To Safeguard Medicare

(The Medicare Payment Advisory Commission, or MedPAC, is an independent Congressional agency established in 1997 to advise Congress on a range of issues affecting the Medicare program. They issue two reports a year, in June and March.)

With each passing year, the commission’s concern about Medicare’s long-term sustainability intensifies. To slow the growth in expenditures we have concluded the need to make changes across a broad front. Medicare’s spending has been growing much faster than the economy (and) will have the additional challenge of higher enrollment associated with retiring baby boomers.

Some specifics concerning recommendations for Medicare reimbursement to providers:

• Most indicators of payment adequacy for hospital services are positive. Access continues to be good with more hospitals opening than closing. Medicare margins remain low, but while they may be negative in aggregate, they still may be adequate to cover the costs of efficient hospitals;
• Physician reimbursements should be increased by 1.1 percent in 2010, equal to this year’s raise;
• Skilled Nursing Facility reimbursement should remain the same;
• Home health agencies continue to be paid significantly more than cost, with margins of 16.6 percent in 2007. Because of the consistently high margins and other positive indicators, home health payments should be significantly reduced in 2010 by 5.5 percent;
• Inpatient rehabilitation facility services should not be given their projected update for 2010;
• Long-term care hospital services should get a 1.6 percent increase in 2010;
• Medicare’s Hospice payment system contains incentives that make very long stays profitable for the provider. Recommendations include a system under which payments begin at a relatively higher rate and decline as length of stay increases with an additional payment at the end of the episode. There also should be greater physician engagement in certifying patient eligibility including more oversight concerning potential conflicts of interest and patterns of treatment.
• Finally, Congress should mandate the reporting of comprehensive information on drug and medical equipment manufacturers’ relationships with physicians and other healthcare entities and that this information be publicly posted. There also should be public disclosure of physician investment in hospitals and other healthcare providers.

(The full report is available at http://www.medpac.gov/about.cfm.)